The reappointment of Ben Bernanke as Chairman of the Federal Reserve punctuates a sad period of U.S. monetary policy and financial regulation.  Mr. Bernanke endorsed and continues to defend policy that kept interest rates too low too long.  In part under his stewardship, the Fed failed to recognize or take steps to mitigate the housing bubble.  It then failed to anticipate the severity of collateral damage when the bubble burst.  Mr. Bernanke participated in the incoherent policy of rescuing Bear Sterns, letting Lehman fail, and bailing out AIG, ultimately extending “too big to fail” beyond any previous bounds.

Praise of Mr. Bernanke for allegedly having prevented another Great Depression exaggerates the possible role of any single person and underrates his mistakes.  Once liquidity evaporated, the Federal Reserve and Treasury guaranteed everything in sight.  While Mr. Bernanke may be due praise for some or even many decisions made under enormous pressure, he should neither have sought nor been rewarded with another term — simply as a matter of principle.  His reappointment reflects Wall Street support, fear, and hubris.